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Public service payouts on track for $1 billion

Phillip Thomson

The federal government is on track to fork out $1 billion in redundancy payouts to public servants even before entitlements such as leave are paid.

Analysis of 760 retrenchments across a number of Commonwealth employers since the federal election show the average redundant public servant has been leaving the bureaucracy with $64,331 plus entitlements.

The figures reinforce a Canberra Times prediction in Decemberwhich, using Treasury economic outlook data to analyse a smaller total of redundancies, said payouts could reach as high as $1 billion.

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The federal government was now in the process of reducing the bureaucracy by 16,500 by mid-2018 and was yet to detail how much the total redundancy bill would cost.

Latest figures released by Commonwealth employers in answer to questions on notice were the best progress report yet of sackings up until the middle of 2014 and show some large departments were concentrating significant cuts in Canberra.

Three quarters of the 272 Department of Foreign Affairs and Trade (DFAT) staff made redundant by June, who received average payouts of $52,126 plus entitlements, came from Canberra.

Figures show territory-based staff at the massive Department of Human Services made up half of DHS's 254 retrenchments.

The average redundancy payout at the department was almost $90,000 while the total bill had exceeded $22 million and reached more than $34 million once entitlements, such as leave, were paid.

DHS staff generally received much larger payouts on average compared to the 85 Australian Competition and Consumer Commission (ACCC) staff retrenched in the nine months to June, who received an average of $31,760.

"I think a lot of Human Services staff would generally have a long period of employment within the public service whereas the ACCC would have a fair proportion of younger professional staff who might have spent time in the private sector," said longtime financial adviser to Canberra public servants, Howard Kemp.

Almost half of DHS's 254 redundancies were aged 55 to 64 while 10 were older than 65.

"For most of those between age 55 and 65 it is really a golden time to take a redundancy and they would be throwing their hands in the air with glee," Mr Kemp said.

"In most cases (between 55 and 65) the severance payment would be tax free or close to tax free."

The harshest cuts at DHS were in the budget costs and financial analysis section where 57 jobs were culled out of 254 redundancies as of the middle of this year, followed by human resources, which lost 51 staff.

Eighty per cent were in the executive level 1 or 2 ranks and half of the total number to leave were executive level 1 employees. A quarter of the department's redundant workers had claimed $500 to spend on financial advice.

The Australian Securities and Investments Commission (ASIC) made 150 staff, many from the customer service section, redundant between the federal election and the middle of 2014.

The average ASIC employee retrenched had been on a salary of $95,782 and received a payout of $59,845 plus entitlements.

In the same period Comcare retrenched five staff at an average cost of $86,499 plus entitlements.

Mr Kemp said money from job cuts such as these could be expected to buy whitegoods and other retail items but he predicted it would not help the ACT's real estate prices for homeowners.

"A number will sell their home and retire to the coastal regions," he said.

Fraser MP and shadow assistant treasurer Andrew Leigh said reducing the public service by 16,500 would create more costs through lost capacity and a big redundancy bill.

"When a public servant has served the government with dedication for years or decades, it is right and fair that they should leave with a redundancy package which recognises that contribution," Dr Leigh said.

"The Coalition's claim that it can make big savings by sacking over 16,500 public servants is really just cover for its obsession with downsizing government."

Community and Public Sector Union national secretary Nadine Flood also said the redundancies would hurt service delivery.

This would result in payouts worth $984 million. One influence driving up redundancy bills was the Commission of Audit's call to reduce the number of middle managers, which was already happening at the Australian Tax Office – an agency cutting more than any other, although its dollar figures so far had not been released.

24 comments

What about the financial and emotional cost to a lot of families?

Commenter

Tc

Date and time

August 25, 2014, 8:23AM

You think the Government cares about that?

Commenter

Barry

Date and time

August 25, 2014, 9:28AM

The non public servants of this country are sick and tired of having their taxes used do pay for the huge payouts of the senior public servants who are getting far too much redundancy and other leave payments. Apart form the huge and very obscene payouts the bank executives are so unjustifiably receiving no other employees are getting those very huge amounts.In other words the rich are getting richer and the poor are getting poorer because they have to pay to make the rich richer, there is NO JUSTICE anymore!

It is an unacceptable SHAME that Australia is paying those bludgers more that what they deserve. This country is having one of the words biggest huge payouts and salaries/perks. to those bludgers!.No wonder corruption amongst senior executives is getting out of control.

The way we are heading for is that we are becoming a country like the Philippines where most senior public servants and politicians receive huge amounts whenever they make decisions that only those who are rich will benefit from.

Australia needs a very big SHAKE UP to save it from becoming a Third World Country!

Commenter

hugiie

Location

conder

Date and time

August 25, 2014, 9:02AM

Hugiie what you're not understanding is that it is the Government (Liberals) who are supporting their rich, fat-cat friends whereas the public servants are just people doing their jobs. The public servants are tax payers, they are consumers and are regular people just like you and me. If the government wanted to avoid the huge payouts to these people (which they are entitled to) then they should have planned the cuts to the public service with that in mind. If they weren't hell-bent on being seen to be following through on their own propaganda and instead considered the huge impact of their policies things would be different. Oh.... and if you live in Canberra your income is probably being provided by public servants spending their hard earned money - without them you don't have a job either.

Commenter

Tuggeranong Resident

Date and time

August 25, 2014, 10:37AM

Big payout? I know people at Ford and Alcoa in Geelong getting larger payouts

Commenter

Jane2

Date and time

August 25, 2014, 11:23AM

public servants pay tax too. so they are effectively using their tax to pay a portion of their redundancy. and whilst they are employed their salary is partially paid by the tax they pay!!

Commenter

redundantly excess

Date and time

August 25, 2014, 11:43AM

Nope. Usually two weeks per service year. Many private sector redundancies are vastly more generous than anything paid to a typical public servant on being made redundant. It's funny how the hard core 'economic rationalist' types have no qualms about the idea of stripping contractually agreed rights from people they don't like though. So much for the sanctity of the beloved market system...

Commenter

Troy

Location

Adelaide

Date and time

August 25, 2014, 12:59PM

Especially because of the over 65 year old public servants in defence who are stretching out their retirement in order to put their hands up for a redundancy package on top of their retirement package!

Commenter

Sharron

Location

Canberra

Date and time

August 25, 2014, 3:22PM

Can we please make comments on the so-called reckless spending because of the mining boom?

Please tell us exactly how people, the normal public, got their hands on the cash from the mining boom.

I missed the "mining boom" cash handout line, so I want to know where to line up next time all this free cash is going to be handed out to normal people like me!

Oh, or are you all talking about the 754 visa internatiional workers who were allowed into Australia to take Australian jobs?

You know, the 754 visa workers who took the mining jobs and the tradies' jobs. Are these the spend thrifts you are talking about?

Commenter

Sharron

Location

Canberra

Date and time

August 25, 2014, 11:03AM

Hey Sharron, I don't recall ANY reckless spending of all the (government) income from the mining boom. There was all that money spent on the wars in Irag and Afghanistan, plus all the tax cuts for the rich, but I think they count more as a waste of money, rather than reckless spending, because the country as a whole didn't get anything out of it!

For example, even if the real (FTTP) would have cost $30 B more than it "should" have, at least we would have got *something* out of it, IE a 21st century data network which would last a hundred years and be upgradeable at little cost. As it is, after the MTM FTTN debacle rolls out it will still be all but unusable for the 75% of subscribers with deteriorating copper (even though it cost almost as much). It may cost $50+ billion to "remediate" that, but the current mob doesn't care because it won't be on their watch.

At the 2010 election, Tony & Co said that NOTHING needed to be done about broadband in this country, yet if they had bothered to roll out FTTP while in government it could have been FINISHED by then!